[EN] Netflix Not Cannibalizing Traditional TV Viewing

Mark Lieberman, CEO of TiVo Research and Analytics, Inc. (TRA) said, "Our data show that Netflix is not currently a substitute for traditional television, but offers a way for TV lovers to watch more of the kinds of programs they love. The future of television may tell a different story, but as of today we've found that the Netflix subscribers in our study are not watching less traditional TV."

In May 2013, TRA collected 9,956 responses from a survey conducted of TiVo subscribers who have affirmatively opted in to have their set-top-box viewing information collected as part of TiVo's Power||Watch™ panel. The topic of the survey was about opinions and behaviors regarding subscription based over the top services and their original programming. TRA observed historical TV viewing data from those households from November 2012 through April 2013 across 28 of the most watched TV networks and benchmarked them against the total universe of TRA's 1.5 million intab TV households.
Key observations from this study include the following:

Netflix does not appear to cannibalize traditional TV: There was no significant difference in the amount of traditional TV viewing between the self-reported Netflix and non-Netflix households, nor did either group differ from the overall TV viewing population.

Of the survey respondents 57% stated that they subscribe to Netflix and 18% had watched "House of Cards." 50% also reported they subscribe to Amazon Prime and 18% to Hulu Plus. 8% subscribe to all three over the top services.

Netflix plans to raise prices for new members

Netflix Inc. said that by July, it plans to increase its U.S. prices for new members by a dollar or two a month, after seeing limited impact from a price increase in Ireland.

Any such increase would be Netflix's first such overhaul in the U.S. since the video-streaming company's well-publicized stumbles three years ago.

Netflix's current pricing plan offers unlimited streaming movies and television episodes for $7.99 a month. In addition, Netflix offers a one DVD out-at-a-time plan, also for $7.99 a month.

"Existing members would stay at current pricing for a generous time period," Netflix said. The company said the reaction to a price increase in January for new members in Ireland was "limited."

Netflix revealed the probable pricing changes—which the company hinted at earlier this year—along with its quarterly report. In the first quarter, Netflix added 2.25 million U.S. streaming subscribers, matching the company's projection

Overall, Netflix reported a first-quarter profit of $53 million, or 86 cents a share, up from $3 million, or five cents a share, a year ago. Revenue jumped 24% to $1.27 billion.

The company in January had projected a profit of 78 cents a share. Analysts polled by Thomson Reuters most recently expected a profit of 83 cents a share, with revenue expected to total $1.27 billion.

The last major pricing change by Netflix came in 2011, when it tried to move away from offering a single plan for streaming and DVD-by-mail by introducing two separate plans. The company reversed course after a customer backlash and a major dent in its stock price.

Shares of Netflix, which are frequently volatile following the company's earnings report, rose more than 6% after hours.

Netflix has sought deals for more exclusive content as it deals with competition from Amazon.com Inc. and other outlets. Exclusive contract pacts have been signed with Walt Disney Co. and others, while Netflix also has signed production deals with Disney's Marvel and Sony Corp.'s TV studio to produce new original series.

The company also aims to court new customers with original programming. The second season of "House of Cards," which made its debut in February, generated "a huge audience that would make any cable or broadcast network happy," Netflix said. It intends to launch the second season of "Orange is the New Black," another Netflix program, in June.

Looking ahead, Netflix projected a second-quarter profit of $1.12 a share, above Wall Street's forecast of $1 a share. The company expects to add 520,000 in net domestic streaming additions in the current quarter, with the paid membership for that market expected to total 35.03 million.

Internationally, Netflix added 1.75 million streaming members, more than the company expected in January and bringing the total paid membership to 11.76 million. Netflix expects to add 940,000 new streaming members abroad in the second quarter.

Netflix frequently uses its earnings report to discuss the larger issues affecting the company, and on Monday, the company opted to comment on Comcast Corp.'s $45 billion offer to acquire Time Warner Cable Inc., a proposed combination of the nation's two largest cable companies.

"The combined company would possess even more anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers," Netflix wrote. "For this reason, Netflix opposes this merger."

Netflix Chief Executive Reed Hastings last month called for rules to ensure that big broadband providers like Comcast can't keep charging companies such as Netflix a fee to connect directly to their network—a practice known as paid interconnection, or peering.

Mr. Hastings also recently acknowledged that Netflix had struck a paid peering deal with Comcast, which he said had improved service for Netflix subscribers with Comcast Internet service. He warned such deals could open the door for Internet service providers to charge Netflix and other content providers escalating fees to reach consumers.